New Aakash May be Tough Sell in India

The upgraded version of Aakash is unlikely to shake up the established players in the commercial market.

Datawind LLC Sunday launched an upgraded version of the cheapest tablet computer in the world, the “Aakash 2.” But it is unlikely to shake up the low cost market in India, which is dominated by homegrown manufacturers.

The Canadian startup Datawind, which manufactures its computers in India, has already locked in a supply contract with the Indian government to sell tablets to colleges and universities across the country.

But the commercial version of the seven-inch tablet, named Ubislate 7Ci, is likely to face stiff competition in a market that is already flooded with inexpensive tablets from the likes of Micromax Informatics Ltd HCL Infosystems Ltd. and United Telelinks Ltd.

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Datawind’s upgraded version of tablet comes more than a year after the initial Aakash failed to take off because of technical glitches, such as short battery life, slow speed and poor touch interface. The company has ironed out the flaws, says Datawind’s chief executive Suneet Singh Tuli, adding that the company continues to sell the first version of the tablet. Datawind has sold a total of 300,000 Ubislate tablets since its commercial launch in April, Mr. Tuli said.

The latest version of the Aakash tablet runs on the Android platform and has more powerful processors. It also has a longer battery life than its previous incarnation. Retailing at 3,500 rupees ($64), the tablet is much cheaper than those offered by Datawind’s local counterparts. The older version of Ubislate is priced at 3,000 rupees.

Micromax Informatics, the leader of India’s tablet market with a 23% share according to research firm IDC Inc Apple 's iPad ranked second in the fast-growing market with a 19% share as of the April-June quarter, while local company HCL Infosystems’s held about 14% . More than half of the 341,000 tablets shipped to India in the quarter, including Micromax’s top-selling Funbook, were priced between 6,000 rupees and 8,000 rupees, IDC says.

The competition in this category is likely to further stiffen with Apple Inc. gearing up for the India launch of its iPad Mini–a tablet computer priced at $329–in a bid to target price-sensitive audiences in emerging markets like China and India.

Datawind will sell the Aakash 2 even more cheaply to the government, for just 2,263 rupees, which in turn will sell at half that price to students at colleges and universities.

The company has already signed a contract to supply 100,000 Aakash 2s to the Indian Institute of Technology in Mumbai by the end of this year under a government-sponsored technology education program. The company expects to grab another contract that is likely to be floated by the government next year to deliver five million tablets, Mr. Tuli said.

But at the retail level, the new tablet “may not have a huge impact,” says G. Rajeev, a senior market analyst with IDC. According to Mr. Rajeev, the tablets offered by the likes of Micromax, HCL Infosystems and United Telelinks have better “look and feel” and faster responsive touch interface than the Ubislate.

IDC has previously said that sales of locally-made tablets are likely to see a bump up after several players revamped their portfolios in the last four months.

Further, most of the incumbents, who also sell smartphones, laptops and computers, have good distribution networks in India, while Datawind is relatively new to the market. “The earlier presence of a Micromax and others in the consumer space definitely gives them a much added advantage in terms of consumer know-how,” Mr. Rajeev says.

But he added that Datawind is at least set to gain a toehold in the closely-contested market for government contracts.

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